Global real estate adviser Cushman & Wakefield’s EMEA corporate finance team estimates that asset management agencies have almost €264 billion of European non-core real estate exposure, according to the firm’s latest European Real Estate Loan Sales Market report at Q3 2014.
Cushman & Wakefield completed a thorough analysis of 10 European asset management agencies to determine their combined gross, or ‘face-value’, non-core real estate exposure and consequently estimate the expected levels of commercial real estate (CRE) loan and real estate owned (REO) sales in years to come.
The figures in the report relate to the face value of European CRE loans, residential mortgages and REOs held by entities which have been set up by European governments to externally receive and then liquidate the ‘bad’ assets of one or more national banks.
In total, European asset management agencies hold approximately €264 billion of gross non-core real estate assets, which after allowing for loan loss provisions gives a net total of approximately €173 billion. Overall, the asset management agencies represent around 45% of the total exposure held by all European financial entities, highlighting their significant role within both the current and future deleveraging landscape.
Cushman & Wakefield has recorded €54.9 billion of closed CRE loan and REO transactions in 2014 YTD, more than the volume completed in 2012 and 2013 combined. With a pipeline of €30.8 billion in live sales and €24 billion in planned disposals, the total volume for 2014 will likely break the €60 billion mark.
Frank Nickel, executive Chairman of Cushman & Wakefield’s EMEA corporate finance group, said: “Whilst the UK, Spain and Ireland continue to dominate the investment landscape, new geographies are beginning to attract global capital for the first time – a trend that is only set to continue with the ongoing asset quality reviews helping to facilitate the deleveraging process. However, investors will remain cautious in regards to new markets, with the country’s legal system being a crucial investment factor.”
Source: Cushman & Wakefield